|By Lisa Baertlein and Gayathree Ganesan

|By Lisa Baertlein and Gayathree Ganesan

(Reuters) - McDonald's Corp's <MCD.N> sales at established U.S. restaurants fell for the first time in six quarters as the novelty of all-day breakfast failed to overcome competition from supermarkets and other food sellers.

Shares of McDonald's were down 0.5 percent at $121.60 after the world's biggest fast-food chain released its fourth-quarter report on Monday.

McDonald's and other U.S. restaurant operators are battling competition from convenience stores, supermarkets and meal kit delivery services such as Blue Apron.

Supermarkets have been passing lower food costs on to shoppers, while restaurants are raising menu prices to offset the impact of minimum wage increases.

McDonald's is "mindful of the disparity" in pricing, Chief Financial Officer Kevin Ozan said on a conference call. He and other executives laid out plans to boost traffic by speeding up service, offering limited-time burger specials, testing home delivery, remodeling restaurants and investing in technology like automated ordering and payment through self-service kiosks and mobile devices.

Traffic has fallen more than 10 percent over the last four years at restaurants in the United States, McDonald's most profitable market, according to a client note from RBC Capital Markets analyst David Palmer.

The decline coincided with McDonald's marketing shift away from its popular but profit-squeezing Dollar Menu.

Sales at U.S. McDonald's restaurants open at least 13 months fell 1.3 percent in the fourth quarter, squeaking by analysts' estimates of a 1.4 percent drop, according to research firm Consensus Metrix.

International results also beat analysts' expectations, due to strength at restaurants in the UK, China, Japan and certain markets in Latin America.

U.S. restaurants introduced all-day breakfast in October 2015 as part of Chief Executive Officer Steve Easterbrook's plan to reverse lagging sales.

Sales did benefit, which made year-earlier comparisons in the latest quarter difficult, McDonald's said in a statement.

"These changes were supposed to drive a steady and sustainable uplift in (consumer) spending rather than a one-off spike in sales, but it is increasingly clear that this strategy is not delivering," Neil Saunders, head of retail analyst firm Consuming, said in an email.

McDonald's fourth-quarter revenue fell nearly 5 percent to $6.03 billion, mainly due to the sale of restaurants to franchisees as part of Easterbrook's turnaround plan.

Excluding special items, earnings were $1.43 per share, exceeding the analysts' average estimate by 2 cents, according to Thomson Reuters I/B/E/S.